In or around 2005, world oil production stopped growing and oil prices began to escalate dramatically, as we know only too well. Whilst standard economics theory teaches that increasing prices would enlarge the supply, these economists did not factor in a simple geological reality which is that the world has a finite amount of oil in the ground. We are now consuming oil faster than we can produce it and as one oil well runs dry it has proven impossible to replace with a new one. ‘Peak oil’ is the point when the maximum rate of global oil extraction is reached, after which the rate of production enters terminal decline. Put another way, no matter how many drills we poke into the ground we cannot find more oil to replace the stuff we are burning. Inevitably we are going to run out of oil completely. The industrial nations began burning oil in earnest about 100 years ago and the rate of use has constantly accelerated. It is reasonable then to think that unless we slow down we will have exhausted all of the world’s oil somewhere around 2050. We also need to address the damaging environmental impact of burning all the remaining oil over the next 40 years. All this whilst we are trying to come to grips with the affect that escalating price and reduced oil availability will have on world economies. When put together a rather problematic future looms. See Links for further info.
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